Temecula crafting new policy for auto dealer fee reimbursements

The city of Temecula is crafting a new policy to process requests from auto dealers who want their development impact fees reimbursed when they build new dealerships or expand existing dealerships.

The new policy, which will be considered at Tuesday night’s regular meeting, will require dealers to specify their terms before construction and those terms will be considered by the council at a public hearing.

These sort of deals are entertained by cities because dealerships — as opposed to housing developments that also are subject to development impact fees — generate hefty sales tax receipts for the city’s general fund.

From the staff report: “If approved, the applicant will be reimbursed an amount equivalent to the city of Temecula (development impact fees) and user fees paid and identified in the application, not to exceed the lessor of: 75 percent of the verified annual sales tax revenue, net of adjustments (excluding any Temecula transactions and use tax) for the first four full quarters of operation; or 1.75 percent of the actual construction cost of the facility (the maximum amount deemed to be de minimus, according to the Department of Industrial Relations); or $250,000.”

In the same agenda item, the council will be considering approval of the reimbursement agreement for Audi Temecula, which was negotiated prior to construction of the dealership and will not be subject to the terms of the new economic development policy.

The Audi agreement calls for the city to reimburse the luxury car dealer $297,182.99 of the $302,789,23 in fees and user fees Hoehn paid to construct its $17 million dealership, which sits next door to the Mercedes-Benz dealership on Temecula Center Drive that negotiated a similar deal when it was built in 2013.

The new policy, according to city officials, will limit the economic exposure and risk for the city, while still providing an incentive for new development in the city.

“Future negotiations for fee reimbursements will be finalized prior to the approval of the entitlements for a proposed dealership or expansion of an existing dealership,” the report states.